HB-4645, As Passed House, February 12, 2008

SUBSTITUTE FOR

HOUSE BILL NO. 4645

A bill to amend 1939 PA 21, entitled

"Regulatory loan act,"

by amending the title and section 1 (MCL 493.1), the title as

amended by 2001 PA 270 and section 1 as amended by 2002 PA 393, and

by adding section 16.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

TITLE

An act to define and regulate the business of making

regulatory loans; to permit the licensing of persons engaged in

that business; to provide for the administration of the licensing

provisions of this act and for the promulgation of rules; to

provide for the powers and duties of certain state governmental

officers and entities; to require disclosure of certain information

for refund anticipation loans; to prescribe certain duties and

obligations of the parties to a refund anticipation loan; and to

prescribe penalties.

Sec. 1. (1) This act shall be known and may be cited as the

"regulatory loan act".

(2) As used in this act:

(a) "Advertising" means publishing or broadcasting, or causing

to be published or broadcast, material that has been prepared for

public distribution by means of newspapers, magazines, or

electronic media. Advertising does not include a stockholder

communication, such as an annual report, interim financial report,

registration statement, security, prospectus, application for

listing a security on a stock exchange, or proxy materials.

Advertising does not include a communication addressed to a person

who has previously executed a loan agreement relative to that

person's account.

(b) "Annual percentage rate" means the rate as computed under

the federal truth in lending act, 15 USC 1601 to 1667f.

in accordance with this act, and personal property acquired in the

general conduct of business transacted under this act.

(d) ~~(c)~~ "Commissioner" means the commissioner of the office of

financial and insurance ~~services~~ regulation in the department of

~~consumer and industry services~~ labor and economic growth.

(e) ~~(d)~~ "Control person" means a director or executive officer

of a licensee or a person who has the authority to participate in

the direction, directly or indirectly through 1 or more other

persons, of the management or policies of a licensee.

(f) ~~(e)~~ "Executive officer" means an officer, member, or

partner of a licensee, including chief executive officer,

president, vice president, chief financial officer, controller,

compliance officer, or any other similar position.

(g) "Facilitator" means a person that individually or in

conjunction or cooperation with another person processes, receives,

or accepts for delivery an application for a refund anticipation

loan or a check in payment of refund anticipation loan proceeds or

in any other manner materially facilitates the making of a refund

anticipation loan. The term does not include any of the following:

(i) A person described in section 20.

(ii) An affiliate that is a servicer for a person described in

section 20.

(iii) A person certified, registered, or licensed to engage in

the practice of public accounting under article 7 of the

occupational code, 1980 PA 299, MCL 339.720 to 339.736.

(h) ~~(f)~~ "Financial licensing act" means any act listed in

section 2 of the consumer financial services act, 1988 PA 161, MCL

487.2052.

(i) ~~(g)~~ "License" means a single license issued to a single

place of business.

(j) ~~(h)~~ "Licensee" means a person licensed or required to be

licensed under this act.

(k) ~~(i)~~ "Liquid assets" means cash, unrestricted deposits in

banks, and readily marketable securities at their then market

value.

(l) ~~(j)~~ "Loan" or "regulatory loan" means a loan made by a

licensee to an individual for personal, family, or household use.

The term does not include a refund anticipation loan.

(m) ~~(k)~~ "Person" means an individual, partnership,

association, corporation, limited liability company, or other legal

entity.

(n) "Refund anticipation loan" means an extension of credit to

a taxpayer that a person arranges to be repaid directly from the

proceeds of the taxpayer's federal or state personal income tax

refund.

(o) "Refund anticipation loan fee" means the charges, fees, or

other consideration charged or imposed by a person acting as a

lender or facilitator for the making of a refund anticipation loan.

The term does not include any charge, fee, or other consideration

usually charged or imposed by a facilitator in the ordinary course

of business for tax return preparation, electronic filing of tax

returns, or other nonloan services.

(p) "Taxpayer" means an individual who files a federal or

Michigan personal income tax return.

Sec. 16. (1) Before a taxpayer completes an application for a

refund anticipation loan, the facilitator shall clearly disclose

all of the following in writing, in 14-point type, to the taxpayer

on a form separate from the application:

(a) A listing or table of refund anticipation loan fees and

the annual percentage rates charged by the facilitator or lender

for 3 or more representative refund anticipation loan amounts. For

each refund anticipation loan amount, the schedule shall list

separately the amount of each fee and the amount of interest

charged by the facilitator or lender and the total amount of fees

and interest charged.

(b) That the refund anticipation loan is an extension of

credit and not the taxpayer's actual personal income tax refund.

available without applying for a refund anticipation loan.

(d) The average time announced by the appropriate taxing

authority within which the taxpayer can expect to receive a refund

if the taxpayer does not obtain a refund anticipation loan and the

taxpayer's return is filed using either of the following methods:

(i) Electronically and the refund is directly deposited in the

taxpayer's bank account.

(ii) By mail and the refund is directly deposited in the

taxpayer's bank account or mailed to the taxpayer.

(e) That the internal revenue service with respect to a

federal personal income tax return, or the department of treasury

with respect to a Michigan personal income tax return, does not

guarantee either of the following:

(i) That the full amount of the anticipated refund will be

paid.

(ii) A specific date on which the taxpayer will receive the

refund.

(f) That the taxpayer is responsible for repayment of the

refund anticipation loan and related fees in the event the tax

refund is not paid or is not paid in full.

(g) The estimated time within which the proceeds of the refund

anticipation loan will be paid to the taxpayer if the loan is

approved.

(h) The fees charged by the facilitator or lender if the

refund anticipation loan is not approved.

(2) Before entering into a refund anticipation loan agreement,

the facilitator shall clearly disclose both of the following to the

taxpayer:

(a) The estimated total fees for the refund anticipation loan.

(b) The estimated annual percentage rate for the refund

anticipation loan.

(3) A facilitator that facilitates or offers to facilitate a

refund anticipation loan shall not do any of the following:

(a) Require a consumer to enter into a refund anticipation

loan arrangement in order to complete a tax return.

(b) Misrepresent a material factor or condition of granting a

refund anticipation loan.

loan promptly after an applicant applies for the refund

anticipation loan.

(d) Engage in any fraudulent transaction, practice, or course

of business with any person in connection with a refund

anticipation loan.

(4) A borrower who obtains a refund anticipation loan may

rescind the refund anticipation loan, on or before the close of

business on the business day following the day the loan is made, by

returning the original check issued to the borrower for the loan or

paying the amount of the refund anticipation loan by money order or

certified check to the lender or the facilitator. A facilitator

shall not charge the borrower a fee for rescinding a refund

anticipation loan and shall return any fee charged for making a

refund anticipation loan if the refund anticipation loan is

rescinded under this subsection. However, a facilitator or lender

is not required to return to a customer who rescinds a refund

anticipation loan under this subsection a fee charged to the

customer by the facilitator or lender for establishing and

administering a bank account to electronically receive and

distribute the customer's tax refunds.

(5) A person is not required to obtain a license under this

act to act as a facilitator of refund anticipation loans. Sections

2 to 15a and sections 17 to 24 do not apply to facilitators or

refund anticipation loans.

(6) A person, including, but not limited to, a facilitator or

a member, officer, director, agent, or employee of a facilitator,

that violates or participates in a violation of this section is

guilty of a misdemeanor punishable by a fine of not more than

$500.00, or imprisonment for not more than 6 months, or both.

(7) A political subdivision of this state shall not adopt any

rule, regulation, code, or ordinance to restrict or limit any

requirements under this section relating to refund anticipation

loans. This section supersedes and preempts any rule, regulation,

code, or ordinance of any political subdivision of this state

relating to refund anticipation loans.

(8) As used in this section, "lender" means a person that

makes a refund anticipation loan.